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After Kosie Louw took over as chairman of the Global Forum on Transparency and Exchange of Information for Tax Purposes, the forum conducted peer reviews on 50 jurisdictions, worked to develop a methodology for the implementation of the standard for automatic exchange of information (AEoI) drawn up by Achim Pross and the CTPA's International Cooperation and Tax Administration Division, and oversaw 51 countries signing up to that standard. It's an impressive resumé, and one that has earned Louw another two years in office as well as a place in ITR 's Global Tax 50 2014. "The world is a very different place now to what it was even five years ago when the Global Forum was restructured and this is due in large part to the consensus that the Global Forum has built up around its work," said Louw in the Forum's 2014 tax transparency progress report.
Louw also serves as the chief legal and policy officer at the South African Revenue Service (SARS) – a particularly challenging position given South Africa's domestic growth and emerging role as an example for other African countries.
With forty years in tax behind him, Louw has not slowed down in his commitment to improving the system in his native South Africa and stamping out evasion globally.
International Tax Review: AEoI has been a landmark step for global transparency – what needs to happen now to ensure its success?
Kosie Louw: Commitment to the process is a very important step. Thus far 93 jurisdictions have committed to AEoI in either 2017 or 2018. This is a significant number and a major step forward, but the goal is to grow this number over time.
The next step is of course implementation. There will no doubt be challenges from various perspectives. It is our collective responsibility to find solutions to these challenges and to assist especially smaller and developing jurisdictions.
The task of the Global Forum is to monitor the implementation of AEoI and to make sure the necessary support is provided to those jurisdictions that need it.
In all of this it is crucial for the Global Forum to maintain and sustain the leading role it is playing in promoting tax transparency to combat tax evasion.
ITR: Many businesses still pursue aggressive tax planning. Given that new laws against evasion are developed all the time, compliance can be confusing. What is the role of industry and business in this debate?
KL: I think it is important for leadership in business and industry to set the example and create the culture in their environment that it is morally the right thing to do to pay your fair share of tax. There is a massive industry out there of people who design and market tax schemes which creates the temptation for businesses to improve their profitability. Yes, at the end of the day the tax laws set the rules of the game, but there is a bigger picture and context for everything. It requires a mind shift. Proper governance mechanisms should be put in place to ensure tax compliance and tax should be raised to the board level of domestic and multinational companies.
ITR: You've had an impressive two years in office and have another two years to come as head of the forum. What is first on your agenda for 2015?
KL: To prepare for the monitoring of implementation of AEoI for 2017/2018.
We need to finalise the Terms of Reference for AEoI and the methodology in 2015 to monitor the implementation thereof by members.
We need to assist smaller jurisdictions and developing countries so they can also enjoy the benefits of AEoI. We will have to develop programmes in conjunction with our partners such as regional bodies, international organisations and individual countries who wish to contribute.
At the same time we must not lose sight of our monitoring work in relation to EOI on request and to raise our standards in that regard as well to be ready for the new round of peer reviews that will start in 2016.
ITR : Africa has been struggling with corruption, tax evasion, and illicit outflows of funds. How will the OECD's African Initiative improve this? What is South Africa's role?
KL: The Africa Initiative has a number of objectives, namely:
Raising awareness of EoI in Africa and its benefits;
Creating the space and structures for Africa and African leadership to take ownership of this initiative;
Growing the number of African members of the Global Forum;
Providing assistance through capacity building and technical assistance by working with African and international bodies; and
Leaving a legacy in Africa of improved EoI after a period of three years.
South Africa will play its role but at the end of the day this is an African initiative. We are looking at first mover countries who together with bodies such as the African Tax Administration Forum (ATAF), CREDAF (Centre de rencontre des administrations fiscales) and other international bodies, will work to steer and drive this initiative.
Although some African countries are still trying to build their basic tax administration capabilities, laying the foundations for EoI will assist them in doing that. For example, creating the basic rights to request information and to require taxpayers to keep records hugely assists in administering your domestic tax system. In today's world this is an absolutely essential tool a tax administration must have in its administrative toolkit. You cannot just be reliant on what is disclosed. You require additional information gathering powers to obtain information from both taxpayers and third parties domestically and internationally. Having the additional powers to request and exchange information internationally provides countries with that additional advantage to obtain information about money and assets invested outside their countries that might have escaped their domestic tax net. This is especially so in Africa which is a mineral-rich continent and where we have seen many examples of profit shifting.
ITR: What do you foresee as the biggest challenge the global tax community faces in 2015?
KL: The slow growth in many parts of the world still places great stress on governments' revenue streams. Although tax increases are options, they have their limitations and increasing tax compliance will remain a key feature. We have seen the first set of BEPS guidelines seeing the light to assist in limiting unacceptable tax practices and implementation of these rules will have to commence in 2015. Practical and creative ways will have to be found to implement these, especially around amendments to tax treaties. However, you can have the best rules in place but if you do not have the information it remains a problem. That is why EoI is such an important ingredient in this total package to improve tax compliance worldwide and to stop the disproportionate leakage of governments' revenue streams which can otherwise be used to improve the lives of hundreds of millions of poor people.
The Global Tax 50 2014 |
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| Gold tier (ranked in order of influence) 1. Jean-Claude Juncker 2. Pascal Saint-Amans 3. Donato Raponi 4. ICIJ 5. Jacob Lew 6. George Osborne 7. Jun Wang 8. Inverting pharmaceuticals 9. Rished Bade 10. Will Morris Silver tier (in alphabetic order) Joaquín Almunia • Apple • Justice Patrick Boyle • CTPA • Joe Hockey • IMF • Arun Jaitley • Marius Kohl • Tizhong Liao • Kosie Louw • Pierre Moscovici • Michael Noonan • Wolfgang Schäuble • Algirdas Šemeta • Robert Stack Bronze tier (in alphabetic order) Shinzo Abe • Alberto Arenas • Piet Battiau • Monica Bhatia • Bitcoin • Bono • Warren Buffett • ECJ Translators • Eurodad • Hungarian protestors • Indian Special Investigation Team (SIT) • Chris Jordan • Armando Lara Yaffar • McKesson • Patrick Odier • OECD printing facilities • Pier Carlo Padoan • Mariano Rajoy • Najib Razak • Alex Salmond • Skandia • Tax Justice Network • Edward Troup • Margrethe Vestager • Heinz Zourek |
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